NETWORK ERROR

Bloomberg went down today, and it scared the bejeezus out of the financial markets

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Image: Reuters/Brendan McDermid
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Today’s outage to Bloomberg service around the world underlines just how vital the organization’s near-ubiquitous terminals—which relay financial information and news as well as providing a communication platform for traders, bankers and others—have become. And it raises concerns about whether widespread reliance on them has created a vulnerability to major disruption.

Without Bloomberg terminals for the better part of two hours in London, market activities ground to a halt, leaving participants “sitting on their hands,” said Michele Gesualdi, a London-based portfolio manager at Kairos Partners, a fund of funds.

Such interruptions are not unheard of, but they usually last only around 30 minutes, he said. “It was very important and quite scary, to be honest,” Gesualdi told Quartz in an email. “It shows that the main input for people to look and trade markets can shut down.”

Bloomberg said that the worldwide outage was “significant,” but that it had restored all services by the UK afternoon. Speculation raged about whether the incident was caused by a cyber attack or even something as mundane as a spilled drink. Bloomberg said it was simply an “internal network issue.”

“We experienced a combination of hardware and software failures in the network, which caused an excessive volume of network traffic,” Bloomberg said in a written statement. “This led to customer disconnections as a result of the machines being overwhelmed.”

The service interruption had a ripple effect in the UK. The government postponed a weekly sale of government bonds after traders were hit by the problem. Bloomberg is the main platform for trading bonds.

And the hiccup led many to speculate on whether Bloomberg’s centrality to financial markets is too much of a liability:

There are 320,000 Bloomberg terminals worldwide, according to Fortune, with users concentrated in global financial centers: London, New York and Hong Kong. A single subscription costs $20,000 per year.

For much of his 41-year career, Mark Grant, managing director of Dallas-based broker dealer Southwest Securities, has been a Bloomberg terminal user. And over time, he has seen the traditional bond market trading desk shift from using phones to email and messaging platforms on the Bloomberg terminal to conduct business.

“If Bloomberg doesn’t function, there’s a lot of the investment banks and institutions that are cut off,” he tells Quartz, adding. “You really could disrupt—in a serious manner—the world’s financial markets.”